What Are Binary Options?
Up or Down
Binary options trading requires the trader to speculate on whether the price of an asset (a product traded on the financial markets, e.g. Facebook stock or the euro) will rise or fall within a given time frame.
Basically, the trader asks a very simple question: Up, or down?
There are only two possible outcomes with binary options – either you predict correctly and win, or you lose.
Pick and Mix
Binary options traders can pick from a range of up to 180 assets when deciding what to trade, including currencies, commodities, stocks and indices. Multiple trades can be open at the same time, each for a different type of asset, or the trader can choose to focus on a single trading product.
Trade in 3 Steps
Binary options trading is incredibly straight-forward. If you think that the underlying asset is going to go up in value during the set time period allotted for the trade then hit the green UP button. However, if you think that its value is likely to drop over the given period then hit the red DOWN button. If you predicted the direction correctly, then your contract is “in the money,” when it expires, and you win – and if you failed to correctly predict the outcome then it expires “out the money”.
Making a trade is done in three steps.
- Pick an asset to trade – any currency, commodity, stock, or index.
- Make a prediction – UP or DOWN.
- Choose the amount you want to trade – then click TRADE.
Besides for the Classic Option of binary options trading (described above), there are other very popular methods, including Pro Option (where traders can use special built-in tools to help them sharpen their strategy and strengthen their skills) and Speed master 60 Seconds (where traders need to predict minute-long price fluctuations).
Need for Speed
Binary options trading is incredibly fast-paced. No download is required, so set-up is quick.
The process of making a trade is also very brief, while offering high payouts in a short time span. Trades can be made with a wide range of expiration times, such as daily or hourly. And traders who prefer the adrenaline rush of a lightning fast trade can opt for minute-long trades, that from start to finish, last only 60 seconds.
More experienced binary options traders decide what to trade and then anticipate the direction it will take based on news events. For example, above average rainfall could impact the sale of agricultural commodities like wheat, while political upheaval in an oil rich region could impact the price of Crude Oil. Additionally, major economic announcements, or reports published on a regular basis, such as unemployment rates may impact a country’s economy and effect the whether its currency rises or falls. Even a new Apple announcement on the release of the latest iPhone OS can impact stock rates.